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Directors Report of Sakthi Sugars Ltd.

Mar 31, 2015

The Board of Directors of the Company presents its Annual Report together with the Audited Financial Statements of the Company for the year ended 31st March, 2015

Particulars 2014-15 2013-14

Sales (Net)

Sugar Division 42455.46 38344.75

Distillery Division 10654.66 15543.16

Cogeneration Division 16884.29 16884.29

Soya Division 13656.46 13711.06

Total sales 83650.87 70728.11

Other Income 3245.53 307.63

Total Income 86896.40 71035.74

Profit Before Finance Cost and

Depreciation & Amortisation 14375.67 1791.45

Finance Cost 12934.20 18590.93

Provision for Depreciation and Amortisation 6379.36 6638.21

Net Profit before Tax (4937.89) (23437.69)

Provision for Tax (1460.96) (7499.36)

Net Profit after Tax (3476.93) (15938.33)

Balance of Profit brought forward (27402.41) (11464.08)

Less: Previous year depreciation adjustment 423.20 -

Surplus carried to Balance Sheet (31302.54) (27402.41)

REVIEW OF OPERATION

The operations of Sugar and Alcohol Divisions of the Company during the financial year have been affected due to non-availability of adequate sugarcane for crushing and low realisation on sugar sold and the reduced availability of molasses. However, operation of Power Division has been encouraging due to higher rate of realisation per unit of power with the Company coming out of Power Purchase Agreement and engaging in sale of power through bidding process. There has been no change in the nature of business during the financial year and until the date of this report.

SUGAR DIVISION

The quantum of sugarcane crushed at various units of the Company during the year 2014-15 is as under:

Name of the Units Cane crushed (in tonnes)

Sakthinagar 7,23,966

Sivaganga : 2,62,650

Modakkurichi : 74,284

Dhenkanal : 4,15,577

During the year under review, 1.32 lakh MT of sugar was produced by the Company, which is less by 0.15 lakh MT as compared to the previous year. This is on account of reduction in the sugarcane availability. The quantum of sugar sales and the sale value has gone up slightly during the year, even though there is a decrease in the average selling price of sugar per quintal.

DISTILLERY DIVISION

During the year under review, 161.18 lakh litres of industrial alcohol was produced at Sakthinagar Distillery Unit and 84.26 lakh litres, at Dhenkanal Distillery Unit.

SOYA DIVISION

23,056 tonnes of soya bean was crushed in the soya plant during the year under review. This division had exported products worth Rs.2253.13 lakhs to various countries.

CO-GENERATION DIVISION

The total power generated in the co-generation plants during the year was 3922.77 lakh units out of which 3179.21 lakh units of power was exported to Tamilnadu Electricity Board. As the rate per unit of power under the Power Purchase Agreements (PPA) entered into with Tamilnadu Power Generating and Distribution Company Limited (TANGEDCO) was not viable for generation of power using coal, the Company has come out of the PPA. The Company has entered into another agreement with TANGEDCO for sale of power at a higher rate per unit of power through bidding process. This Agreement will expire on 30th September 2015.

FUTURE OUTLOOK

The selling price of sugar has come down far below the cost of production and realisation on sale of sugar does not even meet the cost of sugarcane crushed. This has made the sugar production unviable. With the sugar season 2014-15 expected to end in surplus stock of sugar, the possibility of sugar price going up in the near future is doubtful.

Besides reduced selling price for sugar, imposition of VAT at 5% on sugar sales by Tamilnadu State Government has placed the sugar mills in Tamilnadu at a disadvantageous position as they have to face competition due to arrival of more quantity of sugar for sale from other States where there is no VAT on sugar. Similar situation is faced in respect of sale of industrial alcohol by the manufacturers in Tamilnadu State on account of local levy of VATbeing higher than CSTon imports from neighbouring States.

Unless the State and the Central Governments take corrective actions to bail out the bleeding sugar industry, the outlook of sugar industry will continue to be bleak.

DEPOSITS

The Company has not accepted any deposit from public during the financial year under review. At the end of the financial year, 4 deposits amounting to Rs.0.65 lakh (including interest) remained unclaimed. Of this 2 deposits amounting to Rs.0.34 lakh have since been repaid.

CORPORATE INFORMATION

As the Madras Stock Exchange Limited (MSE) had applied to SEBI for voluntary exit as a Stock Exchange, the Company made an application to MSE for voluntary delisting from that Stock Exchange, which has been approved by that Exchange. The equity shares of the Company remains delisted from MSE from 15th October 2014. The equity shares of the Company continue to be listed on National Stock Exchange of India Limited (NSE) and the BSE Limited (BSE).

As per the directions of the Hon'ble High Court of Judicature at Madras, meetings of equity shareholders and holders of FCCB were convened on 22nd July 2015 and 23rd July 2015 respectively for obtaining their approval for the scheme of arrangement for settlement of the outstanding FCCB (Series B). However, at the instance of certain bondholders, the High Court has postponed the aforesaid Court convened meetings to October 2015 to facilitate modification of the Scheme.

The Company continues to be under the Corporate Debt Restructuring Scheme with respect to the secured debts availed from Banks/Financial Institutions. The rework package given by the Company has been approved by the CDR Empowered Group and documentation in respect thereof is yet to be done.

DIRECTORS AND KEY MANAGERIALPERSONNEL

It is with deep grief and regret, your Directors place on record the demise of Dr.N.Mahalingam (DIN : 00206894), one of the Promoters and Founder Chairman of the Company, on 2nd October 2014. The Directors also place on record their appreciation of the contributions made by Dr.Mahalingam in the development of the Company over a period of more than half a century.

Dr.M.Manickam (DIN : 00102233), Executive Vice Chairman, has been reappointed for a further period of five years from 24th October 2014, subject to the approval of the Central Government. The Government's approval is yet to be received.

At the meeting of the Board of Directors held on 12th November 2014, Dr.M.Manickam has been elected to be the Chairman of the Board and has been re-designated as Executive Chairman.

Sri M. Balasubramaniam (DIN : 00377053) has been appointed as Managing Director and Sri M. Srinivaasan (DIN : 00102387) has been re-appointed as Joint Managing Director with effect from 28.6.2013 and 23.1.2014 respectively for a period of 5 years, subject to the approval of the Central Government. The Central Government has approved the appointment/reappointment for 5 years, but restricted its approval for payment of remuneration for the period from the date of appointment/reappointment till 31st March 2014 and advised the Company to make fresh applications under the Companies Act 2013 for its approval. Accordingly applications have been made to the Central Government for payment of remuneration to Sri M. Balasubramaniam and Sri M. Srinivaasan from 1st April 2014 and the approvals are awaited.

The Board has re-appointed Sri V.K. Swaminathan (DIN : 00210869) as Executive Director for a period of five years from 1st November 2015, subject to the approval of the banks and financial institution, members of the Company and of the Central Government as may be applicable.

The Board of Directors at its meeting held on 30th September 2014 had appointed Sri K.V. Ramachandran (DIN : 00322331), Sri S.Chandrasekhar (DIN : 00011901) and Sri S. Balasubramanian (DIN : 00458139) as Additional Directors to hold office upto the date of the ensuing Annual General Meeting of the Company. With a view to comply with the requirements of Section 149(1) of the Companies Act, these Additional Directors have been appointed as Independent Directors for a term of five years from 30th September 2014, subject to approval of the Members at the ensuing Annual General Meeting.

Mrs.Priya Bhansali (DIN : 00195848) has been appointed by the Board as Additional Director with effect from 27th March 2015 to hold office until the date of the ensuing Annual General Meeting of the Company.

Tamil Nadu Industrial Development Corporation Limited and IDBI Bank Limited have withdrawn their respective Nominees Sri B. Elangovan (DIN : 00133452) and Sri T.A. Ganesh (DIN : 01113674) from the Board of Directors of the Company from 16th October 2014 and 20th May 2015 respectively. The Directors place on record their appreciation of the contributions made by the above Nominee Directors to the Company during their tenure of office as Directors. Sri P.S. Ravendernath (DIN : 00030770) has been nominated on the Board of the Company by Asset Reconstruction Company (India) Limited effective from 2nd June 2015.

Notices together with requisite deposits have been received from certain Members of the Company pursuant to Section 160 of the Companies Act 2013 signifying their intension to propose resolutions for appointment of Sri K.V. Ramachandran, Sri S. Chandrasekhar, Sri S. Balasubramanian and Mrs. Priya Bhansali as Independent Directors of the Company at the ensuing Annual General Meeting. The Nomination and Remuneration Committee and the Board of Directors have recommended appointment of these Directors as Independent Directors by the members at the ensuing Annual General Meeting.

Sri V.K. Swaminathan retires by rotation at the ensuing Annual General Meeting and is eligible for re-appointment.

Sri S. Audiseshiah, a retired IAS Officer, has been appointed as Chief Executive Officer of the Company during the financial year and he is not a member of the Board.

Pursuant to the requirement of Section 203 of the Companies Act, 2013, the following Directors/Executives have been designated as whole time Key Managerial Personnel during the year: Dr.M.Manickam, Executive Chairman

Sri M.Balasubramaniam, Managing Director

Sri M.Srinivaasan, Joint Managing Director

Sri S.Audiseshiah, Chief Executive Officer

Sri M.K.Vijayaraghavan, Chief Financial Officer; and

Sri S.Baskar, Sr.Vice President-Finance & Company Secretary

DIRECTORS RESPONSIBILITY STATEMENT

In pursuance of section 134 (5) of the Companies Act, 2013, the Directors hereby confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the loss of the company for that financial year;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

MEETINGS OF BOARD OF DIRECTORS

The Board met 6 times during the financial year ended 31st March 2015. The details of the Board Meetings and the attendance of the Directors are given in the Corporate Governance Report.

COMPOSITION OF AUDIT COMMITTEE

The Audit Committee was reconstituted by the Board on 30.9.2014. The Audit Committee comprises the following Directors as its members:

1. Sri C.Rangamani, Chairman,

2. Sri N.K.Vijayan, and

3. Sri K.V.Ramachandran

Details regarding meetings of the Audit Committee and the attendance of the members are given in the Corporate Governance Report.

BOARD EVALUATION

Pursuant to the provisions contained in the Companies Act 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, Committees of Directors and individual directors. The manner of evaluation is given in the Corporate Governance Report.

DETAILS OF REMUNERATION TO DIRECTORS

Details of Ratio of Remuneration to each Director to the median employee's remuneration and other disclosures required under Section 197(12) of the Companies Act 2013 and Rule 5(1) of the Companies (Appointment and Remuneration) Rules 2014 are given in Annexure-A. The Company does not have any employee attracting the provisions of Rule 5(2) of the said Rules.

RISK MANAGEMENT POLICY

Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee. The details of the Committee are set out in the Corporate Governance Report. The risk management policy aims to identify, evaluate and mitigate risks. It seeks to ensure transparency and to minimise adverse impact on the business operations of the Company.

ASSOCIATE COMPANY

Effective from 1st April 2014, Sakthi Auto Component Limited has become an Associate Company with about 26% of its total share capital being held by the Company. Pursuant to the third proviso to Rule 6 of the Companies (Accounts) Rules 2014, consolidated financial results of the Company and the Associate Company for the financial year ended 31st March 2015 are not made. In view of this, report on the performance and financial position of the said Associate Company is not provided in terms of Rule 8 of the said Rules

INTERNAL CONTROL

The Company has internal control system commensurate with the size of the Company. Adequate procedures are set for detecting and preventing frauds and for protecting the Company's assets. The head of Internal Audit Team reports to the Chairman of the Audit Committee for the purpose of maintaining independence and Internal Audit Reports are placed before the Audit Committee together with statement of significant audit observation and the suggested corrective action followed by a report on action taken thereon.

VIGIL MECHANISM

The Company has a whistle blower policy and a vigil mechanism for directors and employees to report genuine concerns in the prescribed manner. The vigil mechanism provides adequate safeguards against victimisation and for direct access to the Chairman of the Audit Commitee in appropriate or exceptional cases. The details of the whistle blower policy are posted on the website of the Company. No complaint has been received under this mechanism during the year under review.

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement, a Report on Corporate Governance along with Auditors Certificate with respect to its compliance forms part of this Report. Adetailed Management Discussion and Analysis Report also forms part of this Report.

OTHER DISCLOSURES UNDER THE COMPANIES ACT 2013

i) Extract of Annual Return

Extract of the Annual Return is given in Annexure-B.

ii) Changes in Share Capital

There has been no change in the share capital during the financial year 2014-15.

iii) Policy on Directors' Appointment and Remuneration

The Company's policy for selection and appointment of directors, senior management personnel and fixation of their remuneration, including criteria for determining qualifications, positive attributes, independence of a director, are given in Annexure-C.

iv) Related Party Transactions

All the related party transactions are at arm's length basis and have taken place in the ordinary course of business. Omnibus approval of the Audit Committee is obtained for the transactions which are foreseen and repetitive in nature. A statement of all related party transactions is placed before the Audit Committee on quarterly basis.

The Related Party Transactions Policy as approved by the Board is uploaded on the Company's website www.sakthisugars.com.

The details of the transactions with Related Party are provided in the accompanying financial statements.

v) Statement of declarations given by Independent Directors

The Independent Directors have given declarations to the Board to the effect that they meet with the criteria of independence as provided in Section 149(6) of the Companies Act 2013 and the relevant rules.

vi) Significant material orders passed by court or authorities

There are no significant orders passed by Court or regulatory authorities which would impact the status of the Company and its future operations.

vii) Particulars of loans, guarantees or investments

The Company has not given any loan or guarantee or has acquired any security during the financial year 2014-15 under Section 186 of the Companies Act 2013.

viii) Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 134(3)(m) of the Companies Act 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 is given in Annexure-D.

ix) There are no material changes affecting the financial position of the Company which has occurred between the end of the financial year and the date of this report.

STATUTORY AUDITORS

Pursuant to Section 139(1) of the Companies Act 2013 and Rule 6 of the Companies (Audit and Auditors) Rules, the members of the Company have appointed M/s.P.N.Raghavendra Rao & Co., Chartered Accountants, Coimbatore, as Statutory Auditors of the Company for a period of three consecutive years commencing from the conclusion of the 52nd Annual General Meeting of the Company upto the Conclusion of the 55th Annual General Meeting, subject to ratification at the Annual General Meeting (AGM) each year. Necessary resolution in this regard is included in the Notice for the ensuring AGM.

SECRETARIAL AUDIT

Pursuant to Section 204 of the Companies Act 2013, the Board of Directors of the Company has appointed M/s. S.Krishnamurthy & Co., Company Secretaries, Chennai as Secretarial Auditors to undertake the secretarial audit of the Company. Secretarial Audit Report of M/s. S.Krishnamurthy & Co., Company Secretaries, Chennai is annexed as Annexure-E.

COST AUDIT

M/s. STR & Associates, Cost & Management Accountants, Tiruchirapalli, are the Cost Auditors for auditing the cost accounting records relating to Sugar, Industrial Alcohol, Power and Soya Divisions of the Company for the year ended 31st March 2015. The said Firm has been appointed for the financial year ending 31st March 2016 and necessary resolution for ratification of their remuneration is included in the Notice for the ensuing Annual General Meeting.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Pursuant to the provisions of Section 135 of the Companies Act 2013 and Schedule VII there to, the Company has constituted a CSR Committee and has adopted a CSR Policy. As the Company has incurred loss for the three preceding financial years, the requirement of incurring expenditure towards fulfillment of its corporate social responsibility did not arise during the financial year under review.

DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT 2013

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressed) Act 2013. An Internal Complaints Committee (ICC) has been set up at every work place to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

No sexual harassment complaint has been received during the financial year 2014-15.

AUDITORS REPORT

With reference to the Statutory Auditors' remarks, your Directors wish to state that the unprovoked interest and guarantee commission to the holding company will be accounted subject to the approval of the CDR Empowered Group.

ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation of the valuable assistance and co-operation extended by the shareholders, cane growers, banks, financial institutions and Government authorities. They also wish to appreciate the dedicated services rendered by officers, staff and workers of the Company.

On behalf of the Board of Directors

Coimbatore M MANICKAM

8th August 2015 Executive Chairman


Mar 31, 2014

Dear Members

The Directors present their Annual Report together with the audited financial statements of the Company for the year ended 31st March 2014.

FINANCIAL RESULTS FOR THE YEAR ENDED 31st MARCH 2014 (Rs.in lakhs)

Profit before finance cost and depreciation & amortization expense 1791.45

Less: Finance cost 18590.93

Depreciation & amortization expense 6638.21

(25229.14)

Profit/(Loss) before Tax (23437.69)

Less: Income Tax expenses:

Deferred Tax (7499.36)

Profit /(Loss) after Tax (15938.33)

Surplus from last year (11464.08)

Closing balance (27402.41)

REVIEW OF OPERATIONS

The decrease in quantum of cane crushed, uneconomical prices for sugar and power coupled with high sugarcane price had adverse impact on the financial results of the Company.

SUGAR DIVISION

The quantum of sugarcane crushed at various units of the Company during the year 2013-14 is as under:

Name of the Units Cane crushed (in tonnes)

Sakthinagar : 7,61,395

Sivaganga : 4,10,435

Modakkurichi : 1,48,341

Dhenkanal : 3,33,651

During the year under review, 1.47 lakhs MT of sugar was produced by the Company. There is substantial reduction in production as compared to the previous year due to reduced level of cane availability owing to drought condition.

DISTILLERY DIVISION

During the year under review, 277.01 lakh litres of industrial alcohol was produced at Sakthinagar Distillery Unit and 77.32 lakh litres at Dhenkanal Distillery Unit.

SOYA DIVISION

22,780 tonnes of soya bean was crushed in the soya plant during the year under review. This division had exported products worth Rs.2454.90 lakhs to various countries.

CO-GENERATION DIVISION

The total power generated in the co-generation plants during the year was 1614.96 lakh units out of which 944.89 lakh units of power was exported to Tamilnadu Electricity Board.

FUTURE OUTLOOK

The outlook of Indian Sugar Industry continues to be bleak. Sugar industry, the last one to be freed though not fully from Government regulations, is yet to get adjusted to the market equilibrium.

The sugar season 2014-15 may end in surplus production over consumption on all India basis and as such the realization on sugar may not improve without Government initiatives. The incentive announced by the Central Government for export of raw sugar is a step in the right direction to reduce the surplus. The steps intended to be taken by the Central Government like increase in duty on import of raw sugar and interest free loans for payment of arrears of cane will definitely help the industry to look up. It is hoped that appropriate measures will be taken by the Government for the survival of the dwindling sugar industry.

The Company expects a marginal drop in the quantity of cane crush during the current year as compared to the previous financial year. The drop in cane crush will have impact on the performance of the distillery and co-gen division due to reduced availability of molasses and bagasse.

The Company continues to be under the Corporate Debt Restructuring Scheme with respect to restructuring of its secured debts availed from Banks/Financial Institution. Since servicing of the loans from most of the Banks have become irregular/Non-performing assets, the Company has approached the CDR Forum for a second re-schedulement of the repayment terms.

DEPOSITS

The Company has not accepted any deposit from public during the year under review. At the end of the financial year, 7 deposits amounting to Rs.1.15 lakhs (including interest) which were due for repayment remained unclaimed on their due dates.

CORPORATE ACTION

During the financial year under review, the Company has issued and allotted 5,94,05,940 equity shares at a price of Rs.30.30 per share on preferential basis to A B T Limited, a company belonging to the Promoter Group, against the sum of Rs.180 crores brought in by that company, in terms of the Corporate Debt Restructuring Scheme approved by the CDR Empowered Group. This amount has been utilized for repayment of loans and payment of interest to banks as envisaged in the CDR package. After this allotment the Company has become subsidiary of A B T Limited.

A draft Scheme of Arrangement with the holders of FCCB (Series B) for settling their over dues aggregating to USD 15.6 million has been approved by the Board of Directors and necessary applications have been made to Stock Exchanges for approval as required under Listing Agreement. This Scheme is subject to the approval of the stock exchanges, SEBI, RBI and shareholders and bond holders of the Company, and sanctioning of the Scheme by the High Court of Judicature at Madras.

The Board of Directors at its meeting held on 14th August 2014 has approved voluntary delisting of the equity shares of the Company from Madras Stock Exchange for the reason that the said Exchange has submitted application to SEBI for voluntary exit as a Stock Exchange. Necessary application will be made by the Company to Madras Stock Exchange in this regard. The equity shares of the Company continue to remain listed on Bombay Stock Exchange and National Stock Exchange.

DIRECTORS

IDBI Bank has withdrawn Sri V.M.Manogaran as its nominee on the Board of Directors of the Company effective from 1.2.2014 and in his place nominated Sri T.A.Ganesh. Sri S.Doreswamy, Director, resigned from the Board on personal grounds on 24.3.2014. The Directors place on record their appreciation of the valuable services rendered by Sri V.M.Manogaran and Sri S.Doreswamy during the tenure of their office as Directors of the Company.

With effect from 28.6.2013, Dr.M.Manickam was redesignated as Executive Vice Chairman and Sri M.Srinivaasan as Joint Managing Director.

Sri M.Balasubramaniam has been appointed as Managing Director of the Company and Sri M.Srinivaasan has been re-appointed as Joint Managing Director with effect from 28.6.2013 and 23.1.2014 respectively for a period of 5 years subject to the approval of the Central Government.

The Board has re-appointed Dr.M.Manickam as Executive Vice Chairman for a period of five years from 25.10.2014, subject to the approval of Banks, financial institution, as may be required, and of the members of the Company and Central Government.

The following Directors retire by rotation at the ensuing Annual General Meeting and are eligible for reappointment:

1. Sri P.K.Chandran

2. Sri M.Balasubramaniam

3. Sri C.Rangamani

Pursuant to Section 149 of the Companies Act, 2013 and the Listing Agreement, the Board has recommended appointment of Sri C.Rangamani, Sri P.K.Chandran, Sri S.S.Muthuvelappan and Sri N.K.Vijayan, existing Independent Directors, as Independent Directors by the shareholders at the ensuing Annual General Meeting.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956 with respect to Directors'' responsibility statement, it is hereby confirmed:

a. that in the preparation of the annual accounts for the financial year ended 31.3.2014, the applicable accounting standards had been followed;

b. that the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the loss of the Company for the year under review;

c. that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

d. that the Directors had prepared the annual accounts on a going concern basis.

AUDIT COMMITTEE

The Audit Committee was reconstituted on 11.2.2014 and 30.5.2014 on account of change in nominee of IDBI Bank and resignation of Sri S.Doreswamy. At present the Audit Committee comprises the following Directors as its members:

1. Sri C Rangamani, Chairman

2. Sri M Balasubramaniam

3. Sri N.K.Vijayan, and

4. Sri T.A.Ganesh

SUBSIDIARY COMPANIES

The performance of the auto component manufacturing units in India and in Portugal namely Sakthi Auto Component Limited, Sakthi Auto Ancillary Private Limited and Sakthi Portugal SA is satisfactory.

Pursuant to the general direction given by the Central Government, vide general circular dated 8th February 2011, and the consent given by the Board of Directors of the Company in terms of the said circular, copies of the Balance Sheet, Statement of Profit and Loss, Reports of the Board and of the Auditors, as the case may be, of the following subsidiary companies, viz. Sakthi Auto Component Limited, Sakthi Auto Ancillary Pvt Limited, Orlandofin BV, Sakthi Services GmbH, Sakthi Portugal SA and Sakthi Auto Mauritius Limited have not been attached to the Balance Sheet of the Company as at 31st March 2014. The consolidated financial statement and the details of the subsidiaries that are required to be provided under the said circular have been separately furnished forming part of the Annual Report. The annual accounts of the subsidiary companies and the related detailed information on the accounts of the subsidiary companies will be made available to the shareholders of the company and of the subsidiary companies on specific request at any point of time. The Annual Accounts of the subsidiary companies will also be kept for inspection by any shareholder at the Registered Office of the Company and of the subsidiary companies concerned. The details of the accounts of the above subsidiary companies are also provided in the Company''s website.

During the financial year under review Sakthi Netherlands BV and Sakthi European Foreign Sales Corporation BV have been deregistered and the application for deregistration filed by Sakthi Holdings BV is pending disposal by the concerned authority.

In terms of Accounting Standard 21 relating to consolidated financial statements, accounts of the following subsidiaries, viz. Sakthi Europe Verwaltungs GmbH, Arvika Gjuteri AB, Arvinova AB, Arvika Handforming Gjuteri AB and Sakthi Sweden AB, are not consolidated since there is a long term restriction in the flow of cash from these subsidiaries to the holding company as the said subsidiaries are under the control of the Administrators appointed by the respective Courts in Germany and Sweden.

The Company holds 65% of the equity shares of Sakthi Auto Component Limited (SACL). As per the definition of subsidiary company under the Companies Act 2013, convertible preference shares should also be taken into consideration for determining the subsidiary status. Pursuant to the change in the definition, SACL has become an Associate Company and not a subsidiary company with effect from 1st April 2014. In view of this, the Indian and European step down subsidiaries of SACL are also not subsidiaries of the Company from that date.

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement, a Report on Corporate Governance along with Auditors Certificate with respect to its compliance forms part of the Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report as required under the Listing Agreement is given in the section on Corporate Governance.

AUDITORS

M/s. P.N.Raghavendra Rao & Co., Chartered Accountants, the Statutory Auditors of the Company, retire at the conclusion of the forthcoming Annual General Meeting and being eligible, have offered themselves for re-appointment for a period of three consecutive years from the conclusion of the ensuing Annual General Meeting, pursuant to Section 139(2) of the Companies Act, 2013 read with Rule 6 (3) of the Companies (Audit and Auditors) Rules 2014. As required under the Proviso to Section 139(1) of the Companies Act 2013, the Company has obtained the written consent and certificate from M/s. P N Raghavendra Rao & Co. to the effect that their appointment, if made, will be in accordance with the conditions prescribed and that they satisfy the eligibility criteria provided in the said Act and Rules.

COST AUDIT

M/s. STR & Associates, Cost Accountants, Tiruchirapalli, are the Cost Auditors for auditing the cost accounts relating to Sugar, Industrial Alcohol, Power and Soya Divisions of the Company for the year ended 31st March 2014. The due date of filing the Cost Audit Report is 27th September 2014.

The same firm has been reappointed as Cost Auditors for Sugar, Industrial Alcohol, Power and Soya Divisions of the Company for the financial year ending 31st March 2015. The remuneration to the Cost Auditors for the said financial year is subject to ratification by the shareholders in the ensuing Annual General Meeting.

For the year ended 31st March 2013, the due date for filing cost audit report for the Sugar, Industrial Alcohol and Power Divisions in XBRL mode, was 27th September 2013. The actual date of filing the cost audit reports was 27th September 2013.

CONSERVATION OF ENERGY

a) Energy Conservation measures taken:

In Sakthinagar, Grid separator system was provided in boiler to collect the un-burnt fly ash before APH and re-fire it in boiler furnace to improve the boiler efficiency.

b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy:

No significant investment is envisaged.

c) Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods:

Increase in efficiency of boiler resulting in reduction in cost of fuel.

Particulars regarding consumption of energy, research and development, technology absorption and foreign exchange earnings and outgo have been provided in Annexure 1 to the Report.

PARTICULARS OF EMPLOYEES

The Company has no employee drawing remuneration attracting the provisions of section 217(2A) of the Companies Act, 1956.

AUDITORS'' REPORT

With reference to the Auditors'' remarks, your Directors wish to state that (i) the entire funded interest under the CDR Scheme included in Other Non-Current Assets will be written off during the financial year ending 31st March 2015 in four equal quarterly instalments; and (ii) the unprovided interest and guarantee commission to the holding company will be accounted subject to the approval of the CDR Empowered Group.

ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation of the valuable assistance and co-operation extended by the shareholders, cane growers, banks, financial institutions and Government authorities. They also wish to appreciate the dedicated services rendered by officers, staff and workers of the Company.

On behalf of the Board of Directors

Coimbatore N MAHALINGAM 14th August 2014 Chairman


Mar 31, 2013

To the Members

The Directors present their Annual Report together with the audited financial statements of the Company for the year ended 31st March 2013.

FINANCIAL RESULTS FOR THE YEAR ENDED 31st MARCH 2013

(Rs.in lakhs)

Profit before finance cost and depreciation & amortization expense 8530.95

Less: Finance cost 13680.63

Depreciation & amortization expense 6598.08

20278.71

Profit/Loss before Tax -11747.76

Less: Income Tax expenses:

Deferred Tax -3005.37

Profit /Loss after Tax -8742.39

Surplus from last year -2721.69

Closing balance -11464.08

SUGAR DIVISION

The quantum of sugarcane crushed at various units of the Company during the year 2012-13 is as under:

Name of the Units Cane crushed (in tonnes)

Sakthinagar 1519411

Sivaganga 587973

Modakurichi 610715

Dhenkanal 338222

During the year under review, 2.86 lakhs MT of sugar was produced by the Company. This is marginally higher than the production level for the previous year.

During the year under review, 360.07 lakh litres of industrial alcohol was produced at Sakthinagar Distillery Unit and 70.03 lakh litres at Dhenkanal Distillery Unit.

SOYA DIVISION

19320 tonnes of soya bean was crushed in the soya plant during the year under review. This division has exported products worth Rs. 2937.80 lakhs to various countries.

CO-GENERATION DIVISION

The total power generated in the co-generation plants during the year was 3087.36 lakh units out of which 1961.98 lakh units of power was exported to Tamilnadu Electricity Board.

Even though there is increase in quantum of sales and realization, they are not commensurate with the increase in cost of production. In view of this, the financial performance of the company is not as expected.

FUTURE OUTLOOK

The Central Government''s announcement of partial decontrol of sugar industry is expected to have positive impact and will help the mills in getting better realization on sugar. The prevailing drought condition may result in reduction in availability of sugar cane.

The performance of the Distillery Division and the Co-generation Division of the Company are expected to be satisfactory for the current year.

The Company continues to be under the Corporate Debt Restructuring Scheme with respect to restructuring of its secured debts availed from Banks/Financial Institution.

DEPOSITS

The Company has not accepted any deposit from public during the year under review. At the end of the financial year, 13 deposits amounting to Rs. 3.00 lakhs (including interest) which were due for repayment remained unclaimed on their due dates.

DIRECTORS

The following Directors retire by rotation at the ensuing Annual General Meeting and are eligible for reappointment:

1. Sri M Srinivaasan

2. SriNKVijayan

3. Sri S Doreswamy

DIREC TORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956 with respect to Directors'' responsibility statement, it is hereby confirmed:

a. that in the preparation of the annual accounts for the financial year ended 31.3.2013, the applicable accounting standards had been followed;

b. that the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the loss of the Company for the year under review;

c. that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

d. that the Directors had prepared the annual accounts on a going concern basis.

The Audit Committee was reconstituted on 20.9.2012 and at present the Audit Committee comprises the following Directors as its members:

1. Sri CRangamani, Chairman

2. Sri S Doreswamy

3. Sri M Balasubramaniam

4. Sri V M Manogaran and

5. SriNKVijayan

SUBSIDIARY COMPANIES

The performance of the auto component manufacturing units in India and in Portugal namely Sakthi Auto Component Limited, Sakthi Auto Ancillary Private Limited and Sakthi Portugal SAis satisfactory.

With a view to simplify the organisation structure in Europe and to reflect the real value, the investment in Sakthi Portugal SAhas been revalued at Euro 136.55 million. The shares held by Sakthi Netherlands BV in Sakthi Services GmbH were transferred to Orlandofin BV in April 2013. As a part of the restructuring activity, the step down subsidiaries in Netherlands, viz. Sakthi Netherlands BV, Sakthi European Foreign Sales Corporation BV and Sakthi Holdings BV have proposed for liquidation outside insolvency.

Sakthi Auto Component Limited has allotted equity shares aggregating to Rs. 54.39 crores at par by converting 54,38,616 Participatory Convertible Preference Shares of Rs. 100 each to the holders of the said Preference Shares, including equity shares of nominal value of Rs. 20 crores to the Company, after the date of Balance Sheet. In view of this the shareholding percentage of the Company in Sakthi Auto Component Limited has been reduced to 65%.

Pursuant to the general direction given by the Central Government, vide general circular dated 8th February 2011, and the consent given by the Board of Directors of the Company in terms of the said circular, copies of the Balance Sheet, Statement of Profit and Loss, Reports of the Board and of the Auditors, as the case maybe, of the following subsidiary companies, viz. Sakthi Auto Component Limited, Sakthi Auto Ancillary Pvt Limited, Orlandofin BV, Sakthi Netherlands BV, Sakthi European Foreign Sales Corporation BV, Sakthi Holdings BV, Sakthi Services GmbH, Sakthi Portugal SAand Sakthi Auto Mauritius Limited have not been attached to the Balance Sheet of the Company as at 31st March 2013. The consolidated financial statement and the details of the subsidiaries that are required to be provided under the said circular have been separately furnished forming part of the Annual Report. The annual accounts of the subsidiary companies and the related detailed information on the accounts of the subsidiary companies will be made available to the shareholders of the company and of the subsidiary companies on specific request at any point of time. The Annual Accounts of the subsidiary companies will also be kept for inspection by any shareholder at the Registered Office of the Company and of the subsidiary companies concerned. The details of the accounts of the above subsidiary companies are also provided in the Company''s website.

In terms of Accounting Standard 21 relating to consolidated financial statements, accounts of the following subsidiaries, viz. Sakthi Europe Verwaltungs GmbH, Arvika Gjuteri AB, Arvinova AB, Arvika Handforming Gjuteri AB and Sakthi Sweden AB, are not consolidated since there is a long term restriction in the flow of cash from these subsidiaries to the holding company as the said subsidiaries are under the control of the Administrators appointed by the respective Courts in Germany and Sweden.

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement, a Report on Corporate Governance along with Auditors Certificate with respect to its compliance forms part of the Annual Report.

MANAGEMENT DISCUSSION AND ANALYSE REPORT

Management Discussion and Analysis Report as required under the Listing Agreement is given in the section on Corporate Governance.

AUDITORS

M/s. P.N.Raghavendra Rao & Co., Chartered Accountants, the Statutory Auditors of the Company, retire at the conclusion of the forthcoming Annual General Meeting and being eligible, have offered themselves for re-appointment. As required under section 224(1 B) of the Companies Act 1956, the Company has obtained certificate in writing from M/s. P N Raghavendra Rao & Co. to the effect that their appointment, if made, will be within the limit prescribed in the said Section.

COST AUDIT

M/s. STR & Associates, Cost Accountants, Tiruchirapalli, are the Cost Auditors for auditing the cost accounts relating to Sugar, Industrial Alcohol, Power and Soya Divisions of the Company for the year ended 31s1 March 2013. The due date of filing the Cost Audit Report is 27th September 2013. The same firm has been reappointed as cost Auditors for Sugar, Industrial Alcohol, Power and Soya Divisions of the Company for the financial year ending 31slMarch 2014.

For the year ended 31s1 March 2012, the due date for filing cost audit report for the Sugar, Industrial Alcohol and Power Divisions in XBRL mode, was 27th September 2012 or 28th February 2013 whichever is later. The actual date of filing the cost audit reports was 30th January 2013.

CONSERVATION OF ENERGY

(a) Energy Conservation measures taken:

In Sakthinagar sugar mill, 3rd stage Raw Juice Heating is carried out by 4lh Vapour of Quint instead of 3rd vapour through NBH Dynamic Juice Heater.

Installation of VFD in Feed transfer pumps and Ash compressors in Sakthinagar Cogeneration Unit.

Reduction of pump header pressure in the Raw water transfer pump by reduction of 9 Ata extraction steam pressure for Distillery operation.

(b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy: No significant investment is envisaged.

(c) Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods:

Consumption of steam for sugar process is reduced.

By using VFD in pressure control and speed control of Ash Handling Compressor and Boiler feed transfer pump, there will be energy savings. Reduction of pump header pressure leads to more extraction and more power generation in turbine.

Particulars regarding consumption of energy, research and development, technology absorption and foreign exchange earnings and outgo have been provided in Annexure 1 to the Report.

PARTICULARS OF EMPLOYEES

The company has no employee drawing remuneration attracting the provisions of section 217(2A) of the Companies Act, 1956.

AUDITORS'' REPORT

With reference to the Auditors'' remarks, your Directors wish to state that as per the legal opinion obtained, the interest converted into loan under the Corporate Debt Restructuring Scheme would be accounted as and when they become payable.

ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation of the valuable assistance and co-operation extended by the shareholders, cane growers, banks, financial institutions and Government authorities. They also wish to appreciate the dedicated services rendered by officers, staff and workers of the Company.

On behalf of the Board of Directors

Coimbatore N MAHALINGAM

28th May 2013 Chairman


Mar 31, 2012

The Directors present their Annual Report together with the audited financial statements of the Company for the year ended 31st March 2012.

FINANCIAL RESULTS FOR THE YEAR ENDED 31st MARCH 2012

(Rs.in lakhs)

Profit before finance cost and depreciation & amortization expense 13304.22

Less: Finance cost 12126.30

Depreciation & amortization expense 6528.39

18654.69

Profit before Tax (5350.47)

Less: Income Tax expenses:

Deferred Tax (578.81)

Profit after Tax (4771.66)

Add : Debenture Redemption Reserve withdrawn 551.71

Transfer from General Reserve 1498.26 2049.97

Closing balance (2721.69)

REVIEW OF OPERATIONS SUGAR DIVISION

The quantum of sugarcane crushed at various units of the Company during the year 2011-12 is as under:

Name of the Units Cane crushed (in tonnes)

Sakthinagar : 1562243

Sivaganga : 550126

Modakurichi : 472696

Dhenkanal : 315565

During the year under review, 2.78 lakhs MT of sugar was produced by the Company. As compared to the previous year, there is improvement in the availability of sugarcane in general and the total cane crush by the Company during the year was better than the previous year, which was for 15 months.

DISTILLERY DIVISION

During the year under review 339.78 lakh litres of Industrial Alcohol was produced at Sakthinagar Distillery Unit and 62.41 lakh litres at Dhenkanal Distillery Unit.

SOYA DIVISION

26,072 tonnes of soya bean had been crushed in the Soya plant during the year under review. This division has exported products worth Rs. 1984.47 lakhs to various countries.

CO-GENERATION DIVISION

The total power generated in the co-generation plant during the year was 3393.77 lakh units out of which 2244.17 lakh units were exported to Tamilnadu Electricity Board and others.

FUTURE OUTLOOK

For the next season 2012-13, sugarcane availability is expected to be higher than the current year leading to increased sugar production in the country. This may impact the selling price of sugar. However, the Central Government's policy of allowing export of sugar will help the Indian sugar industry to certain extent. The Company expects to crush higher quantity of cane during the current year compared to the previous year.

The performance of the Industrial Alcohol Division and the Power Division of the Company are expected to be satisfactory for the current year with higher availability of molasses and bagasse.

The Company continues to be under the Corporate Debt Restructuring Scheme with respect to restructuring of its secured debts availed from Banks/Financial Institution.

DEPOSITS

The Company has not accepted any deposit from public during the year under review. At the end of the financial year, 21 deposits amounting to Rs. 5.11 lakhs (including interest) which were due for repayment remained unclaimed on their due dates. Of these, 2 deposits amounting to Rs.0.44 lakh have since been repaid.

DIRECTORS

The Directors regret to report that Sri G G Gurumurthy, Director, expired on 26.6.2011. He was a Director on the Board for a period of about 28 years. The Directors place on record their appreciation of the valuable services rendered by him during the tenure of his office as Director of the Company.

The following Directors retire by rotation at the ensuing Annual General Meeting and are eligible for reappointment:

1. Sri M Balasubramaniam

2. Sri C Rangamani

3. Sri S S Muthuvelappan

The Board of Directors at its meeting held on 29th September, 2011 has reappointed Dr M Manickam as Managing Director of the Company for a period of five years from 25th October, 2011, subject to the approval of members and the Central Government.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956 with respect to Directors' responsibility statement, it is hereby confirmed:

a. that in the preparation of the annual accounts for the financial year ended 31.3.2012, applicable accounting standards had been followed;

b. that the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the Loss of the Company for the year under review;

c. that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

d. that the Directors had prepared the annual accounts on a going concern basis.

AUDIT COMMITTEE

The Audit Committee comprises of the following Directors as its members:

1. Sri C Rangamani, Chairman

2. Sri S Doreswamy

3. Sri M Balasubramaniam and

4. Sri V M Manogaran

SUBSIDIARY COMPANIES

The auto industry globally is performing well. The performance of both Indian and European subsidiaries having manufacturing facilities, viz. Sakthi Auto Component Limited, Sakthi Auto Ancillary Private Limited and Sakthi Portugal SA, have shown considerable improvement as compared to the previous year. It is expected that the growth in the performance will continue in the current year also.

Pursuant to the general direction given by the Central Government, vide general circular dated 8th February 2011, and the consent given by the Board of Directors of the Company in terms of the said circular, copies of the Balance Sheet, Statement of Profit and Loss, Reports of the Board and of the Auditors, as the case may be, of the following subsidiary companies, viz. Sakthi Auto Component Limited, Sakthi Auto Ancillary Pvt Limited, Orlandofin BV, Sakthi Netherlands BV, Sakthi European Foreign Sales Corporation BV, Sakthi Holdings BV, Sakthi Services GmbH, Sakthi Portugal SA and Sakthi Auto Mauritius Limited have not been attached to the Balance Sheet of the Company as at 31st March 2012. The consolidated financial statement and the details of the subsidiaries that are required to be provided under the said circular have been separately furnished forming part of the Annual Report. The annual accounts of the subsidiary companies and the related detailed information on the accounts of the subsidiary companies will be made available to the shareholders of the Company and of the subsidiary companies on specific request at any point of time. The Annual Accounts of the subsidiary companies will also be kept for inspection by any shareholder at the Registered Office of the Company and of the subsidiary companies concerned. The details of the accounts of the above subsidiary companies are also provided in the Company's website.

In terms of Accounting Standard 21, accounts of the following subsidiaries, viz. Sakthi Europe Verwaltungs GmbH, Arvika Gjuteri AB, Arvinova AB, Arvika Handforming Gjuteri AB and Sakthi Sweden AB, are not consolidated since there is a long term restriction in the flow of cash from these subsidiaries to the holding company as the said subsidiaries are under the control of the Administrators appointed by the respective Courts in Germany and Sweden.

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement, a Report on Corporate Governance along with Auditors Certificate with respect to its compliance forms part of the Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report as required under the Listing Agreement is given in the section on Corporate Governance.

AUDITORS

M/s P.N.Raghavendra Rao & Co., Chartered Accountants , Statutory Auditors of the Company, retire at the conclusion of the forthcoming Annual General Meeting and being eligible, have offered themselves for re-appointment. As required under Section 224(1B) of the Companies Act 1956, the Company has obtained certificate in writing from M/s. P N Raghavendra Rao & Co. to the effect that their appointment, if made, will be within the limit prescribed in the said Section.

COST AUDIT

M/s STR & Associates, Cost Accountants, Trichirapalli, are the Cost Auditors for auditing the cost accounts relating to Sugar, Industrial Alcohol and Power Divisions of the Company for the year ended 31st March 2012. The due date of filing the Cost Audit Report is 27th September 2012. The same firm has been reappointed as Cost Auditors for Sugar, Industrial Alcohol, Power and Soya Divisions for the financial year ending 31st March 2013.

For the year ended 31st March 2011, the due date for filing cost audit reports for the Sugar, Industrial Alcohol and Power Divisions of the Company was 27th September 2011, and the actual date of filing the cost audit reports was 24th September 2011.

CONSERVATION OF ENERGY

(a) Energy conservation measures taken:

Use of Integrated Evaporation System along with multi pressure distillation system in the Distillery at Sakthinagar.

In Sakthinagar sugar mill, 3rd vapour is utilized instead of 1st vapour at filtrate juice clarifier for filtrate juice heating.

(b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy:

No significant investment is envisaged.

(c) Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods:

Integrated Evaporation System reduces generation of effluent considerably and consumption of steam per litre of alcohol gets reduced.

There will be reduction in the requirement of steam in the manufacturing process of sugar.

Particulars regarding consumption of energy, research and development, technology absorption and foreign exchange earnings and outgo have been provided in Annexure 1 to the Report.

PARTICULARS OF EMPLOYEES

The Company has no employee drawing remuneration attracting the provisions of section 217(2A) of the Companies Act, 1956.

AUDITORS REPORT

With reference to the Auditors' remarks, your Directors wish to state that as per the legal opinion obtained, the interest converted into loan under the Corporate Debt Restructuring Scheme would be accounted as and when they become payable.

ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation of the valuable assistance and co-operation extended by the shareholders, cane growers, banks, financial institutions and Government authorities. They also wish to appreciate the dedicated services rendered by officers, staff and workers of the Company.

On behalf of the Board of Directors

Coimbatore N MAHALINGAM

30th May 2012 Chairman


Mar 31, 2011

To the Members

The Directors present their Annual Report together with the audited financial accounts of the Company for the year ended 31st March 2011 consisting a period of 15 months.

FINANCIAL RESULTS FOR THE YEAR ENDED 31st MARCH 2011 (Rs. in lakhs)

Profit before interest and depreciation 9249.54

Less: Interest Charges 18165.43

Depreciation on Fixed Assets 3878.48

22043.91 Profit before Tax (12794.37)

Less: Income Tax Expenses:

Deferred Tax (2808.48)

Profit after Tax (9985.89)

Add: Surplus from Previous year 5721.79

Debenture Redemption Reserve withdrawn 494.29

Transfer from General Reserve 3769.81

9985.89

Surplus/Deficit carried over -

REVIEW OF OPERATIONS

SUGAR DIVISION

The quantum of sugar cane crushed and raw sugar processed at various units of the Company during the year 2010-11 is as under:

Name of the Units Cane crushed Raw sugar processed (in tonnes) (in tonnes)

Sakthinagar Unit 1549498 77126

Sivaganga Unit 491845 22088

Modakurichi Unit - 181712

Dhenkanal Unit 314960 55612

Due to shortage of cane, Modakurichi Unit did not take up the crushing operation during the year under review. Sugar cane crushed in Sakthinagar Unit includes sugar cane drawn from areas of Modakurichi Unit.

Out of the total sugar of 5.37 lakhs MT produced by the Company during the year under review, 3.14 lakhs MT of sugar was produced by processing of Raw sugar.

DISTILLERY DIVISION

During the year under review, 490.77 lakh litres of industrial alcohol was produced at Sakthinagar Distillery Unit and 86.06 lakh litres at Dhenkanal Distillery Unit.

The Company has not produced ethanol as the ethanol blending programme has not been implemented in the State of Tamilnadu.

SOYA DIVISION

27995 tonnes of soya bean has been crushed in the Soya plant during the year under review. This division has exported products worth Rs.2336.54 lakhs to various countries.

CO-GENERATION DIVISION

The total power generated in the co-generation plant by the Company during the year was 5640 lakh units out of which 4205 lakh units have been exported to Tamilnadu Electricity Board and others. The implementation of the second co-generation plant with 25 MW capacity at Sakthinagar is delayed and is expected to be commissioned in the current year.

Sakthinagar unit has been awarded first prize for best co-generation in Tamilnadu region for 2009-2010 by the South Indian Sugar Cane and Sugar Technologists Association, Chennai.

FUTURE OUTLOOK

For the year 2011 -12, cane availability is expected to be slightly better than the year 2010-11 on account of increase in planting of sugarcane in the command areas. The country's total production of sugar during the season 2011-12 is estimated to be higher than last season. This may lead to reduction in the selling price of sugar. Besides Government policies, the global demand-supply trends will also have an impact in the financial performance of the Indian sugar industry.

The performance of the Industrial Alcohol Division and Power Division of the Company are expected to be satisfactory for the current year.

The Company continues to be under the Corporate Debt Restructuring Scheme with respect to restructuring of its secured debts availed from Banks/Financial Institution.

DEPOSITS

The Company has not accepted any deposit from the public during the year under review. At the end of the financial year, 46 deposits amounting to Rs.10.45 lakhs (including interest) which were due for repayment remained unclaimed on their due dates. Of these, 4 deposits totalling Rs. 0.59 lakh have since been repaid.

DIRECTORS

The following Directors retire by rotation at the ensuing Annual General Meeting and are eligible for reappointment:

1. Sri S Doreswamy

2. Sri V K Swaminathan

3. Sri P K Chandran

Sri T Santhanakumar was appointed by IDBI Bank as its nominee director in the place of Smt S Usha with effect from 21.10.2010. His nomination was withdrawn effective from 28.5.2011 and in his place Sri V M Manogaran has been appointed as Nominee Director. Your directors wish to place on record the appreciation of the services rendered by Smt S Usha and Sri T Santhanakumar during the tenure of their office as Directors of the Company.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956 with respect to Directors' responsibility statement, it is hereby confirmed:

a. that in the preparation of the annual accounts for the financial year ended 31.3.2011 the applicable accounting standards had been followed;

b. that the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the Loss of the company for the year under review;

c. that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

d. that the Directors had prepared the annual accounts on a going concern basis.

AUDIT COMMITTEE

The Audit Committee was reconstituted on 10.11.2010 and 30.05.2011 on account of the change in the Nominee Director of IDBI Bank Limited. At present the Audit Committee comprises of the following Directors as its members:

1. Sri C Rangamani, Chairman

2. Sri S Doreswamy

3. Sri M Balasubramaniam and

4. Sri V M Manogaran

SUBSIDIARY COMPANIES

The auto industry has turned around globally and is buoyant. There has been significant improvement in the level of operation and performance of both the Indian and European subsidiaries having manufacturing facilities, viz. Sakthi Auto Component Limited, Sakthi Auto Ancillary Private Limited and Sakthi Portugal S.A. The performance of these subsidiaries in the current year is also expected to be encouraging.

On the application made by Tilan Sugar Limited (TSL), wholly owned subsidiary of the Company, under Easy Exit Scheme 2010 announced by the Central Government, the name of Tilan Sugar Limited (TSL) has been struck off in the register maintained in the office of the Registrar of Companies, Tamilnadu, Chennai and is dissolved with effect from 26.10.2010.

Pursuant to the general direction given by the Central Government, vide general circular dated 8th February 2011, and the consent given by the Board of Directors of the Company in terms of the said circular, copies of the Balance Sheet, Profit and Loss Account, Reports of the Board and of the Auditors, as the case may be, of the following subsidiary companies, viz. Sakthi Auto Component Limited, Sakthi Auto Ancillary Pvt Limited, Orlandofin BV, Sakthi Netherlands BV, Sakthi European Foreign Sales Corporation BV, Sakthi Holdings BV, Sakthi Services GmbH and Sakthi Portugal SA, have not been attached to the Balance Sheet of the Company as at 31st March 2011. The consolidated financial , statement and the details of the subsidiaries that are required to be provided under the said circular have been separately furnished forming part of the Annual Report. The related detailed information on the accounts of the subsidiary companies will be made available to the shareholders of the company and the subsidiary companies on specific request at any point of time. The Annual Accounts of the subsidiary companies will also be kept for inspection by the investors at the Registered Office of the Company and that of the subsidiary companies concerned. The details of the accounts of the above subsidiary companies are also provided in the Company's website.

Since the following step down subsidiaries, viz. Sakthi Europe Verwaltungs GmbH, Arvika Gjuteri AB, Arvinova AB, Arvika Handforming Gjuteri AB and Sakthi Sweden AB, are under the control of the Administrators appointed by the respective courts in Germany and in Sweden and there is a long term restriction in the flow of cash from these subsidiaries to the holding company, accounts of these companies are not consolidated in accordance with the provisions contained in Accounting Standard. In view of the dissolution of Tilan Sugar Limited, the accounts of this company are also not consolidated.

During the year under review, Sakthi Auto Mauritius Limited in Mauritius and Luscidco Holdings Co. Limited in Cyprus have become the subsidiaries of the Company with effect from 26th January 2011. As their financial year has ended prior to the date of acquisition, i.e. on 31st December 2010, the accounts of these companies are not consolidated.

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement, a Report on Corporate Governance along with Auditors' Certificate with respect to its compliance forms part of the Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report as required under Listing Agreement is given in the section on Corporate Governance.

AUDITORS

M/s P.N.Raghavendra Rao & Co., Chartered Accountants, the Statutory Auditors of the Company, retire at the conclusion of the Annual General Meeting and being eligible, have offered themselves for re-appointment.

COST AUDIT

The Company appointed M/s STR & Associates, Cost Accountants, to audit the cost accounts relating to Sugar Units, Industrial Alcohol units for the year ended 31st March 2011 with the approval of the Central Government. The same firm has been appointed as Cost Auditors for the financial year ending 31st March 2012.

CONSERVATION OF ENERGY

(a) Energy Conservation measures taken:

Waste heat recovery system has been installed in TVP Plant in Soya Division wherein condensate waste from dryer is collected and used to pre-heat water used in extraction process.

(b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy: Use of Variable Frequency Drives at places wherever possible.

(c) Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods:

Substantial savings in power consumption.

Particulars regarding consumption of energy, research and development, technology absorption and foreign exchange earnings and outgo have been provided in Annexure 1 to the Report.

PARTICULARS OF EMPLOYEES

The company has no employee drawing remuneration attracting the provisions of section 217(2A) of the Companies Act, 1956.

AUDITORS REPORT

With reference to the Auditors remarks, your Directors wish to state that as per the legal opinion obtained, the interest converted into loan under the Corporate Debt Restructuring Scheme would be accounted as and when they become payable.

ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation of the valuable assistance and co-operation extended by the shareholders, cane growers, banks, financial institutions and Government authorities. They also wish to appreciate the dedicated services rendered by officers, staff and workers of the Company.

On behalf of the Board of Directors

N MAHALINGAM Chairman

Coimbatore 30th May 2011


Dec 31, 2009

The Directors present their Annual Report together with the audited financial accounts of the Company for the year ended 31 st December 2009.

FINANCIAL RESULTS FOR THE YEAR ENDED 31 ST DECEMBER 2009 (Rs. in lakhs)

Profit before interest and depreciation 20110.88

Less: Interest 4614.45

Depreciation on Fixed Assets 3025.71

7640.16

Profit before Tax 12470.72

Less : Income Tax Expenses

Prior Year Tax 65.16

Deferred Tax Liability 2056.92

2122.08 Profit after Tax 10348.64

Add : Excess provision reversed 1.15

Reversal of diminution in value of investments 2.00

3.15 Profit before Appropriation 10351.79

Less : Transfer to General Reserve 4000.00

Transfer to Debenture Redemption Reserve 630.00

Surplus carried over 5721.79

REVIEW OF OPERATIONS

SUGAR DIVISION

The quantum of sugar cane crushed and raw sugar processed at various units of the Company for the year 2009 is as under:

Name of the Units Cane crushed (in tonnes) Raw sugar processed (in tonnes)

Sakthinagar 1448556 63469

Sivaganga 434550 49036

Modakurichi - 108589

Dhenkanal 162575 49968

Due to shortage of cane, Modakurichi Unit did not take up the crushing operation. Sugar cane crushed in Sakthinagar Unit includes sugar cane drawn from areas of Modakurichi Unit.

Out of the total sugar of 4.27 lakhs MT produced by the Company during the year under review, 2.39 lakhs MT of sugar was produced by processing raw sugar.

Your Directors are glad to inform that Sakthinagar Sugar Unit has been selected for State Safety Award for two consecutive years 2006 and 2007. Orissa State Government has awarded State Safety Award to Dhenkanal Sugar unit for the year 2007.

DISTILLERY DIVISION

During the year under review, 379.44 lakh litres of industrial alcohol was produced at Sakthinagar Distillery Unit and 31.10 lakh litres at Dhenkanal Distillery Unit.

The Company has not produced ethanol as the ethanol blending programme has not been implemented in the State of Tamilnadu.

SOYA DIVISION

24497 tonnes of soya beans have been crushed in the soya plant during the year under review. This division has exported products worth Rs. 1703.82 lakhs to various countries.

This unit has also been awarded State Safety Award for the years 2006 and 2007 and Industrial Relation Award for the years 2005,2006 and 2007.

CO-GENERATION DIVISION

The total power generated in the co-generation plants at Sakthinagar, Sivaganga and Modakurichi during the year was 4,094 lakh units, out of which 2,992 lakh units have been exported to Tamilnadu Electricity Board and others. The second co-generation plant with 25 MW capacity at Sakthinagar is expected to be commissioned in the current year.

FUTURE OUTLOOK

For the year 2010, the cane availability is expected to be slightly lower than in 2009 on account of overall decrease in planting of sugarcane in the command areas. The Government of Tamilnadu has allowed sale of power to third parties and with the commissioning of the second co-generation plant at Sakthinagar, higher contribution is envisaged.

The long term prices and profitability of Indian sugar companies would be dependent on domestic and international supply demand trends as well as Government policies. The performance of the Industrial Alcohol Division and Power Division of the Company are expected to be good for the current year.

The secured debts availed by the Company from Banks/Financial Institution have been restructured during the year under review on the terms contained in the Letter of Approval dated 16th June 2009 of the CDR Cell.

DEPOSITS

The Company has not accepted any deposit from the public during the year under review. At the end of the financial year, 96 deposits amounting to Rs. 18.20 lakhs which were due for repayment remained unclaimed on their due dates. Of these, 20 deposits totalling to Rs. 4.58 lakhs have since been repaid.

ISSUEOFSHARES

The Company has issued and allotted 34,60,569 equity shares during the financial year by way of conversion of Foreign Currency Convertible Bonds (FCCB) of USD 15.4 million. 19,73,704 equity shares were issued and allotted after the end of the financial year 2009 until the date of the Report by converting FCCB of USD 8.7 million. These shares were allotted at the conversion price of Rs.208/Rs. 190, as the case may be, in respect of Series A/ Series B Bonds in terms of the offering circular.

DIRECTORS

The following Directors retire by rotation at the ensuing Annual General Meeting and are eligible for reappointment.

Sri M Srinivaasan Sri S S Muthuvelappan Sri N KVijayan

Sri M Balasubramaniam was appointed as Joint Managing Director - Finance for a period of 5 years with effect from 23.1.2009 subject to the approval of Central Government since one of the conditions prescribed in Schedule XIII to the Companies Act, 1956 was not satisfied. Likewise the appointment of Sri M Srinivaasan as Joint Managing Director - Technical for a period of 5 years with effect from 23.1.2009 is also subject to the approval of Central Government. The approvals of the Central Government are yet to be received.

In view of the profitable working results for the year ended 31.12.2009 and also all the conditions prescribed in Schedule XIII to the Companies Act, 1956 stand satisfied, the Board of Directors have restricted the validity of the above appointments upto 31st March 2010 and have re-appointed Sri M Balasubramaniam as Joint Managing Director - Finance and Sri M Srinivaasan as Joint Managing Director- Technical for the period from 1.4.2010 to 22.1.2014, subject to the approval of the members at the General Meeting.

DIRECTORS" RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956 with respect to Directors responsibility statement, it is hereby confirmed:

a. that in the preparation of the annual accounts for the financial year ended 31.12.2009 the applicable accounting standards had been followed;

b. that the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the Profit of the Company for the year under review;

c. that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

d. that the Directors had prepared the annual accounts on a going concern basis.

AUDIT COMMITTEE

The Audit Committee comprises of the following Directors, viz. Sri C Rangamani (Chairman), Sri M Balasubramaniam, Sri S Doreswamy and Smt S Usha.

SUBSIDIARY COMPANIES

India is not affected by the world recession as much as developed economies especially in automobile industry. The performance of Sakthi Auto Component Limited (SACL) and Sakthi Auto Ancillary Pvt. Limited (SAAPL) (Indian Subsidiaries) is steady and improving.

Among the European Subsidiaries Sakthi Portugal S.A., has revived registering improved production with increased volume of orders. It is expected to reach the optimum production level in the current year with good margins.

The subsidiaries in Germany except Sakthi Services GmbH, and in Sweden have been declared bankrupt and Germany foundries are under the control of the Administrator appointed by the court and foundry in Sweden has been disposed off by the Administrator.

In terms of approval granted by the Central Government under section 212(8) of the Companies Act, 1956, copies of the Balance Sheet, Profit and Loss Account, Reports of the Board and the Auditors, as the case may be, of the following subsidiary companies viz., Sakthi Auto Component Limited, Sakthi Auto Ancillary Pvt. Limited, Tilan Sugar Limited, Orlandofin BV, Sakthi Netherlands BV, Sakthi European Foreign Sales Corporation BV, Sakthi Holdings BV, Sakthi Services GmbH and Sakthi Portugal SA, have not been attached to the Balance Sheet of the Company as at 31st December 2009. As directed by the Central Government, the financial data of the subsidiaries have been separately furnished forming part of the Annual Report. The related detailed information of the accounts of the subsidiary companies will be made available to the holding and subsidiary companies investors seeking such information at any point of time. The Annual Accounts of the subsidiary companies will also be kept for inspection by the investors at the Registered Office of the Company and that of the subsidiary companies concerned. The details of the accounts of the above subsidiary companies are also provided in the Companys website.

Since the following subsidiaries viz., Sakthi Europe Verwaltungs GmbH, Arvika Gjuteri AB, Arvinova AB, Arvika Handforming Gjuteri AB and Sakthi Sweden AB are under the control of the Administrators appointed by the respective Courts in Germany and Sweden and there is a long term restriction in the flow of cash from these subsidiaries to the holding company, these companies are not consolidated in accordance with the provisions contained in Accounting Standard.

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement, a Report on Corporate Governance along with Auditors Certificate of its compliance forms part of the Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report as required under the Listing Agreement is given in the section on Corporate Governance.

AUDITORS

M/s P.N.Raghavendra Rao & Co., Chartered Accountants, the Statutory Auditors of the Company, retire at the conclusion of the Annual General Meeting and are eligible for re-appointment. A certificate under section 224(1 B) has been obtained from them.

COST AUDIT

The Company has appointed M/s STR & Associates, Cost Accountants, to audit the cost accounts relating to Sugar units and Industrial Alcohol units for the year 2009 with the approval of the Central Government.

CONSERVATION OF ENERGY

(a) Energy Conservation measures taken:

Variable frequency drives are used for co-generation auxiliary cooling water pump and for air compressor in co- generation plant and for high pressure pump drive in RO plant at Modakurichi.

(b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy: VFD for Injection pumps at sugar plant in Modakurichi Unit.

(c) Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods:

Substantial savings in power consumption.

Particulars regarding consumption of energy, research and development, technology absorption and foreign exchange earnings and outgo have been provided in Annexure 1 to the Report.

PARTICULARS OF EMPLOYEES

Particulars of employees as required under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules 1975 and forming part of this Report have been provided in Annexure 2 to this Report.

AUDITORS REPORT

With reference to Auditors remarks, your Directors wish to state that as per the legal opinion obtained, the interest converted into loan under the Corporate Debt Restructuring Scheme would be accounted as and when they become payable.

ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation of the valuable assistance and co-operation extended by the shareholders, cane growers, banks, financial institutions and Government authorities. They also wish to appreciate the dedicated services rendered by officers, staff and workers of the Company.

On behalf of the Board of Directors

Coimbatore N MAHALINGAM

30th April 2010 Chairman

 
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